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what should I be looking for? It has 75,000 miles. What needs to be changed soon/ what should have been changed recently? I drove it and it felt strong BUT the brakes were terrible......what are my options here? I want to keep the 16 inch wheels and it comes with a second set of wheels with Blizzaks. What can I do about the seats? They are kind of beat up. Will WRX seats fit in? Is there a better option (cost is definitely an issue). Thanks in advance.

You should be looking for:
head gasket failure or proof of the fix.
wheel bearing failure.
oil pump/seal leaks.
make sure the fogs work and are not cracked.
If it has the factory sub, make sure it is'nt blown.
Clutch slippage.
spare tire and jack/wrench pack in the trunk.
Look under the hood for anything hacked up.

Thats a little premature. Just because Subaru has had some issues with their 5MT doesnt mean the tranny needs to be rebuilt/replaced at 75,000 miles. Maybe the clutch.

Not EVEN the clutch. I replaced my OE clutch at 102K miles, and honestly it was still in very decent shape. It only slipped twice, and very intermittently at that. I just wanted to get rid of it in case, I suppose.
(But I still have it in my garage...)

As for the transmission, yes, very premature. My car's got 110K on it, and no signs of problems thus far.

Be sure you check to see if the O2 sensor has been replaced, too. There was a recall on them, #WXW80, which was eventually replaced by an ECU reflash recall.

I had five O2 sensors replaced no-charge under that Parts Recall number, and then when they flashed my ECU, the problem stopped. Previously I'd been blowing a CEL every 10K miles or so.

The head gasket problem traditionally isn't as prominent with the SOHC EJ25 engine, but that opinion's been changing lately. There was a "recall" recently for a stop-leak coolant additive, but I'm not sure how realistically helpful the stuff is. I had it done at the dealership when they put my Exedy Sport clutch in.

What about other mods? Are there reasonable brake upgrades for the street? What about audio? Aside from putting in a whole new system, is there anything that one can do to improve? Did anyone change the sub? Is it worth changing? JL Stealth box? Anything else? What about suspension? I read somewhere that u can just put a WRX rear bar in and it will handle more neutral- true/false?

Brakes? That's an easy one. By far the most effective street brake upgrade is the "WRX/H-6" swap.

This entails swapping your front rotors and caliper brackets for those off a WRX. And the rear rotors and caliper brackets, for those off a 2000-2004 Legacy. That rear upgrade is often called the "H-6 upgrade," but that's a little bit incorrect, as other Legacies besides the H-6 model had the same, larger rotors (11.3" or 290mm).

Your car uses the SAME CALIPERS, so it's just the brackets and rotors that need changing. So effectively, this is the increase:

Bigger difference in the rear, for sure, but I haven't seen a single negative review about this upgrade in about three years. Haven't done it on my car yet, but for me that's a money problem. If you wanted to spend more, you can get the GC STi 4-pot calipers up front, which use the same size rotors as the WRX. There are STi 2-pot rear calipers, but they're frightfully expensive.
Many people use the Legacy Turbo rears, which are off the mid-'90s Turbo, **not** the '05 Legacy GT. All of this you can find here:www.subaruwrxparts.com/gc8.html under Brakes.

You could go further and upgrade to '05 Legacy GT brakes, which are like 12.3" or 12.4" up front, but you need 17" wheels year-round, and to me that's excessive. I need to maintain 16"s for winter. But it's an unbelievable setup, if you want to go that way, and relatively cheap next to other aftermarket deals. For the street, "big brake kits" from aftermarket companies aren't going to help, anyway. Their major advantage is on the racetrack, when repeated braking causes heat that's too excessive for OE brakes to handle.

Audio is always worth changing, in my opinion. No stock system is ever going to be as good as a well-designed aftermarket setup. Visit the Audio forum for your answers to that.

As for suspension, a WRX *sedan* rear swaybar measures 20mm, and will bolt up directly. Now, BE CAREFUL... to my knowledge, the '02 WRX had a 20mm, but the sizes have gone up and down a bit, from year to year. To be safe, pick yours up for $80 here: www.subaruwrxparts.com/gc8.html under the Suspension section.

...NOW....

The stock rear swaybar is 13mm, pretty weak. An 18mm bar is ideal for neutrality's sake, with a stock suspension. I personally wouldn't use a 20mm bar until you got a better strut/spring setup, but then again 20mm isn't bad. 22mm+ is bad, on stock struts and springs. Too much roll resistance, without the proper dampening.

Don't get pads that are too aggressive, though. Remember that you need a balance! On the street, you either want OE pads, or something halfway between OE and racing quality.

Race pads have opposite traits as OE pads do, in that they have rotten initial bite (like panic braking on the highway), but do VERY well under repeated, high-heat braking.

OE pads, on the other hand, are excellent for initial bite, but under repeated braking, they go all to hell. So a "sport street" pad will strike a balance between the two. Even among those, though, some are more aggressive than others.